Ricardo Monge-González

Francisco Monge-Ariño

After the economic crisis of the early 1980s, the Government of Costa Rica decided to abandon its import-substitution strategy and move toward integration with the world economy through a gradual process of economic liberalization. During the same period, the country joined international organizations such as the World Trade Organization (WTO) with the purpose of having the legal instruments necessary to protect its commercial interests worldwide. As part of the agreements and commitments made, Costa Rica undertook a significant institutional transformation process in the field of foreign trade, creating institutions to safeguard the commercial rights of its businessmen (producers, exporters and importers) as well as of its citizens. Now, two decades after the start of the economic liberalization process, we are attempting to analyze the degree to which the country had to face unfair trade practices or to apply safeguard measures due to substantial increases of imports adversely affecting its productive sector. We are also interested in examining the degree to which the sectors that benefited from the previous import-substitution model—sectors that have been facing an increased foreign competition as a result of the elimination of tariff and nontariff barriers to imports—have attempted to make use of the protection mechanisms against unfair practices as a new protectionist instrument.

This paper is organized into four main sections, plus an introduction and final considerations. The first section explores the reasons for the adoption of the new development model based on mid-1980s economic liberalization. Sections II and III discuss the legal and institutional framework established by Costa Rica in order to respond to the complaints about unfair practices and safeguard measures. The fourth section contains a summary analysis of each of the cases brought before the Ministry of Economy, Industry and Trade by Costa Rica’s productive sector. Finally, the section on final considerations summarizes the main findings of the study and their economic policy implications.